The general manager of the federal government’s $58 billion Future Fund has refused to say where he sees economic growth in the longer term, despite persistent questioning from coalition senators.
During a Senate estimate hearing in Canberra, Paul Costello wouldn’t reveal the assumptions the fund is relying on due to the “sensitive” nature of the information.
The coalition has criticised Treasury growth forecasts contained in this month’s budget as “highly optimistic” and “top of the range”.
While forecasting a recession in the 2009/10 financial year with a growth rate contraction of 0.5 per cent, by 2011/12 Treasury is projecting the economy steaming along at 4.5 per cent.
On Wednesday night, Liberal senator Cory Bernardi pushed Mr Costello to reveal the assumptions the fund was using in its modelling regarding longer term growth.
“Because of the sensitivity of the answer to that I would like to take that on notice,” the fund’s general manager said.
“I can’t give you the answer to that question now.”
Mr Costello did say the fund saw “challenges” to growth over the next three years “in a global context”.
Superannuation Minister Nick Sherry said the questions should be directed to Treasury.
The Future Fund was set up in 2006 by the former Howard government to help future governments meet the cost of public sector superannuation liabilities.
It currently has assets worth $58 billion.
Under questioning from Liberal senator Scott Ryan, Mr Costello denied there had been any “discussions, consultation or requests” by the commonwealth to invest in government infrastructure projects.
But over the next 12 months the fund is looking to invest more heavily in property and infrastructure generally.
Mr Costello said the fund was looking to purchase “real things producing real income”.
“That’s primarily represented in the property and infrastructure sectors,” he said.
“We’ve been waiting for pricing to clarify there and settle. That’s now looking more attractive to us.
“Our infrastructure programs similarly.
“We’ve been waiting for pricing there to settle and we’re starting to see more interesting opportunities at better pricing.”
The fund’s objective is a minimum return of inflation plus 4.5 per cent over the longer term.
However, Mr Costello told the hearing the fund’s own modelling suggested a real return of inflation plus six per cent was possible.